SEASON 1 EPISODE 21

[INTRODUCTION]

0:06 ANNOUNCER: This is financial climate. Can innovations in finance help the world decarbonize? How can trillions of dollars of assets be redirected to catalyze a net zero economy? We explore these questions through conversations with innovators, experts and investors from around the world. Here's your host, Alex Roth.

[0:33] AR: Anyone paying even a bit of attention to climate solutions knows that in recent years, we've seen tremendous development of wind and solar power generation. Most people also understand that that development needs to continue, along with deployment of other carbon free power sources. But in order for the Clean Energy Transition to succeed, we also need to make ambitious improvements to America's transmission grid.
   
The transmission system is a vast, intricate, nationwide machine that most of us take for granted. Most people don't fully understand all the things it does, why it's important, or how it needs to evolve.
 
My guest today is Rob Gramlich. He's the founder and president of a Washington, DC based consultancy called Grid strategies. You'd be hard pressed to find someone more knowledgeable than he is about the challenges and opportunities of grid improvement. He frequently testifies before Congress the Federal Energy Regulatory Commission and state agencies, and he's widely respected by key decision makers across the political spectrum. I sat down with Rob to better understand why improvements to the transmission system are essential for the success of the renewable energy transition, I was curious what needs to be improved to make the grid function as it needs to. 

I wanted to hear what obstacles are impeding these improvements and where there may be opportunities, even in the current political environment, for meaningful progress on this complex and crucial aspect of the climate problem. Here's our conversation.  

[2:30] AR: Rob Gramlich, welcome to financial climate.  

[2:33] RG: Thanks, Alex, good to be here.  

[2:35] AR: I think people are pretty well aware now that with the crisis of climate change, we have a great need to decarbonize our whole economy. I think a lot of the public is less aware of the importance of transmission in that whole process. Just to start off, can you talk a little bit about what is inadequate about the current transmission grid and what kind of improvements or investments need to be done in order to allow decarbonization to occur?  

[3:05] RG: You're accurately, probably reflecting the person on the street. They don't usually think about the transmission network, which is invisible to most people. Whatever happens past the wall socket is a mystery to most people, but it is, in fact, in my opinion, the critical link. It's the integrator of all the clean resources that we'll need on the system. And large scale wind and solar projects are, to me, the quickest, most deployable and most affordable ways to significantly reduce carbon in the near term, like in the next few years, and this decade longer term, there's any number of technologies that could also come in and be very affordable. But what transmission does is it enables those resources to be connected. We have this massive backlog of wind and solar projects that are trying to connect to the grid, and if we expand the grid, then they can get online faster and start producing their carbon free power. And one thing about wind and solar is they are variable resources, but when the wind is blowing one place, it's probably not blowing in another place. And when you aggregate all these projects across very large regions of the country, and the same is true in other countries, then you get a steadier overall supply, which is more in sync with power demand. 

So there's that, and just also the fact that a lot of the good resource sites are sort of out where land is cheaper. So in rural areas, you can put up big wind and solar projects, and it costs far less than what you would get on your rooftop, though, that's nice too to do that, but to really get a lot of low carbon power for minimal impact on people's power rates those large projects. So of course, transmission brings the remote resources towards population centers, and it enables that variability to be flattened out. The Grid is really critical for those functions. 

[5:02] AR: I know that one of the factors is that recently, there's been this increase in power demand for AI or other things. Can you talk just a little bit about the increase in demand and what is driving that, and what kind of role that plays in the overall need to enhance the transmission grid? I know that's a subject that you and your company have written a lot about. 

[5:23] RG: Yeah, that's right. Well, I mean, power demand growth is the number one issue facing the United States. Power sector, as other countries are witnessing as well, where, you know, we here in in the States, had basically flat power demand for 25 years. It was growing maybe a half a percent per year, which was in contrast to the 70s and 80s, where it got to be 5% in many years, 5% year on year, growth. That was back in the days where all these electrical appliances were being invented and disseminated, so dishwashers and air conditioners and all that, and then, starting around the turn of the century, there wasn't much sort of new appliances, plus some were getting a lot more efficient, like lighting, from the old incandescent to compact fluorescent and then LEDs. So then it was basically flat until just like two years ago, and we at grid strategies, wrote a report two years ago called The era of flat power demand is over. Got a lot of attention at that time, sort of the most of the world hadn't seen it coming, and unfortunately, a lot of the industry hadn't really planned for it. And this is an industry that's very capital intensive.  

The equipment and investments are very long lived assets, often 60,80 year life assets, you kind of need to plan way ahead for those things. But the industry got caught having not planned for it. So we could see, I mean, if you add up utility forecasts around the country, which is what we did in our reported good strategies, we're looking at about 120 gigawatts of new capacity. That's 15% growth by the end of the decade. So, you know, a couple of percent per year, four or five times recent growth levels. So that's a lot, and data centers are probably half that with the increase in demand.  

[7:13] AR: Is that the primary driver of the need for these improvements, or is it also that there are other factors, whether it's that they're in different locations or different types of energy or what, you know, it's funny. So I'm in Washington, DC, and I do it a lot of federal policy, and I talk to a lot of folks on both sides of the aisle. And there are, of course, many exceptions, but in general, I find Republicans and business groups are very interested in the AI race, with China meeting power demand, serving data centers, etc. And they are sort of realizing, well, grid expansion is really critical for all of those things.  

If you talk to Democrats and progressives, they tend to be much more focused on decarbonization and climate objectives. Well, guess what? You need a lot of infrastructure and transmission for that if you want to connect a lot of new clean energy. So it's one of these situations where we might actually find some bipartisan alignment to build the infrastructure, and each side can do it for their own reasons, which might be completely different, but that's fine. Let's build it if people want it.  

[8:23] AR: Absolutely it's a rare area, and certainly a welcome one, where people on different political perspectives might work together on something.  

[8:31] RG: That's right.  

[8:32] AR: You mentioned competitiveness and you mentioned the climate issue. What about reliability? We certainly hear a lot of from a climate perspective about various kind of extreme weather that can cause problems with the grid. Do you find that that's an issue too, and how does that fit into the issues facing the transmission grid?  

[8:51] RG: Yes, absolutely, two main areas. I mean, one is just the sort of physical resilience and strength of our existing wires, because we get really high winds in some of these storms that literally just blow down the lines, or they blow down trees and branches, fly across the street and knock over a line. So increasing the physical rating of our infrastructure so that it can withstand these higher winds or other associated severe weather incidents is important, and there is a lot of utility spending around the country on that.  

And then, completely separately, is the importance of the grid and moving large volumes of power across large swaths of the country during severe weather instances. So you could have a polar vortex, you know, cold snap that afflicts the generation, and in one area, the severe cold might make it hard to start up the old power plants, just like an old car sitting in your driveway like not everything turns on when it's negative 10 degrees. So you have vulnerable generation, but if you have a robust enough grid, including inter regional transmission capacity, you can send 10,15,20 gigawatts of power from one region to the next.  

That's why we say we need a grid that's bigger than the weather. And to some extent, we have it now, but these soda straw lines between areas are often not big enough for the volumes of power, sometimes we want to move during these severe weather instances. So there's a great focus from reliability authorities, including NERC, which is the continental reliability authority, North American Electric Reliability Corporation. They have a great focus on this inter regional capacity, and they're saying we need 35 new gigawatts of capacity between regions. So that's a that's a big part of the reliability agenda, again, completely separate from climate policy or the data center economic development issue. That's a completely separate, independent driver of transmission.  

[10:58] AR: But a lot of similar investments that are needed to address all those Right?  

[11:02] RG: Absolutely. Yep.  

[11:03] AR: Is that a real longer term concern, or is that a thing where you really say, hey, if we don't address this, then we're going to start to see a whole lot more power outages and extended disruption in service to people just because of the extreme weather that we're seeing and the lack of adaptation of the grid? 

[11:20] RG: Yeah, it is for some, and it should be for everyone, a near term consideration that these are real clear and present danger type risks and opportunities we have seen in these severe weather incidents, like all these storms that have names Elliot, Yuri, et cetera, there have been 10 or 12 in the last 10 or 15 years where we saw the same dynamic and we did the math. 

My colleague, Michael Goggin at grid strategies, keeps looking backward, you know, a week or two or three after the event, and look at, oh, wow, if you we just had a another gigawatt of capacity, it would have paid for itself over the four day period of this weather event. And that's really important, because too often we sort of look forward and our forecasting models are usually like blue sky, everything's nice, everything on the grid's working, and there's maybe not massive value for a new transmission. But of course, the real world is always messier than these models, and if you look at these situations after the fact, that sure would have been a great insurance policy to build out more transmission capacity to protect against these scenarios.  

[12:33] AR: Gotcha, what are some of the important things that need to be done to the transmission grid to get it ready to handle all that?  

[12:39] RG: Sure, well, first, there are some technologies that can speedily connect quite a lot, even before you get to new lines and new rights of way, we'll get to those in a second. Those are important, but harder and take longer.  

But you can deploy these things called Grid enhancing technologies that are sort of operational tools, monitoring and control systems for the power grid that sort of serve the ways, or the, you know, navigating app on your grid, and they can deliver more and then you can also reconductor lines. You can put up new cables that can deliver a lot more power. So you just take down the old cable that's probably really old and put up a new one that can deliver a lot more carbon and composite core, for example, those are ways, with new technologies, you can deliver more over existing networks and then the new lines.  

So planning longer term to figure out new routes and pathways for power. A lot of private developers are able to negotiate agreements with landowners, often farmers ranchers, to get access to their land. There's some barriers, certainly, in doing that, permitting and then figuring out who's going to pay for it all. But we have been able to expand new capacity in certain parts of the country in last 10,15 years, and so we need to keep it up. Our pace of doing that is way too slow. We could we could do a lot more, a lot faster.  

[14:04] AR: Got it. So of the improvements that are needed, do you have a sense of how much of that can be solved with these grid enhancement technologies, where they just take existing lines and improve them in various ways? That seems a lot easier than the other way of trying to create whole new lines.  

[14:22] RG: Yeah. I mean, it is a partial solution, but, you know, maybe a quarter to a third of the delivery capacity could be addressed that way.  

[14:30] AR: That's pretty significant. One of the big developments in recent times, I understand that has helped to address some of these issues, was a FERC order called 1920 FERC order, 1920 Can you talk a little bit about what that did and how it helped to alleviate some of these problems? 

[14:46] RG: Yeah, order 1920 named after the year the agency started, is basically a transmission planning rule. And one might think that, oh, there's utilities out there and they must plan their transmission systems, but you'd actually be wrong about that.  

Most utilities don't really do long term transmission planning, and they don't do it on a large regional basis. Which is the most efficient, reliable way to do it, to get the reliability we need, and connect all the new generation and meet power demand growth and all those things, the most efficient way to do it is really on a proactive, long term basis. Let's consider all the scenarios and which transmission pathways show up as beneficial under multiple scenarios.  

So there's kind of a best practice planning methodology that has been employed in different parts of the country at different times, but it's not being deployed everywhere, and it hasn't been deployed consistently. So the federal regulator, Federal Energy Regulatory Commission, FERC, a great agency in Washington where I spent eight years working, basically decided, well, we should mandate these best practices nationwide for all transmission providers. So that's what they did, and it was almost a year ago they finalized the last version of it in order 1920 right around Thanksgiving of 2024.
 
 [16:11] AR: I see. So maybe backing up a little bit, you're talking about how this order helps to enhance planning. Can you just talk a little bit about who are the different stakeholders that need to come together to plan and what are some of their different roles?  

[16:23] RG: Sure. So, I mean, the first and main entity is the transmission owner, which tends to be the utility in a given area. So if you're in Chicago, there's comed. If you're in New York, there's Con Ed if you're in Washington, DC, it might be Exelon, and then, you know, so Cal Edison and Southern California. So there's, you know, there are 100 ish of these large utilities.  

And then there's other types of utilities in other areas, but collectively, they are in FERC’s terminology, transmission providers. These utility also might own generation or do other things, but this order really addresses their transmission function. Those transmission providers are subject to this rule, the states play a role.  

And FERC sort of elevated the role of the states, because when we're looking at regional transmission, typically you have a group of states, so for example, the Mid Atlantic area, as the PJM is the grid planner there, and something like 13 states, plus DC in that region. And so the states kind of need to agree, at least at some level, on how much to build and who's going to pay for it all. So the State's got a role in this. 

And then there's various other industry stakeholders, you know, the different generators, municipal utilities and cooperatives, environmental groups and others who get involved. There is sort of an open, public part of the process under order 1920 that has been really part of most regions rules for some time, but the order 1920 preserves that. And there's kind of a bit of an open participation part of it. But at the end of the day, the regulations apply to the transmission provider, and they have to follow the steps and the methodologies of order 1920.
 
[18:17] AR: I see. When you think about longer term transmission planning, we think about these very long lived assets that are very expensive and are supposed to last a long time. Does it worry you that maybe the evolution of the power system may go in a different direction from what's expected, whether that's for reasons about how people use power or reasons related to technology, for example, maybe it would be distributed storage or things that would make transmission less needed or needed differently from how we think it might be.  

[18:50] RG: I mean, it's always an issue in I would say regulatory policy, right, whether it's, you know, water, telecom, gas, power, anything right? And you know, because the you know, the basic thing to do is forecast your demand and then build to it and allow the utility to recover their costs from the users, you know, and send out the bills. And so you're always worried about stranded costs. And there's always a, I think, a healthy regulator skepticism of the utility's interest in building because that's how they make their money, right? They they invest, and they earn their allowed rate of return. So there's a healthy regulatory skepticism.  

I mean, personally, I'm just very bullish on electricity. I think we use it for so many things in that list of things that's expanding every time you look again at it. I mean, electric vehicles. I got a heat pump, water heater in my house, and now I got an induction stove. And all of these things work great, you know. And the electric vehicles drive way better than the ICE cars, and they're even using power to drill oil and gas in the Permian bases in Texas. And so all the big oil companies and gas drillers and frackers are all about electrifying right? Now we're just using electricity for so many things. So generally bullish on that.  

The one that people are concerned about right now is data centers, because there's so many, like, thousands of them, being proposed all over the country. We know that chips get more efficient each generation of chips, which, you know, you swap out your, you know your chips after a year and a half, and some of these data centers and the algorithms that use the chips get much more efficient. And so we are getting way more efficient in data centers. So you could look at that and say, Oh, well, if we build out all this transmission to serve the data centers, and then they cut their power use by three quarters, then we will have overbuilt the system.  

But on the other hand, the actual compute, like the actual number of computations that are happening, is going up exponentially. Yes, we're doing it more efficiently, but what that's doing is just, you know, softening the electricity growth. It's not actually reducing the electricity growth. I mean, I'm still pretty bullish there. I think most people in the industry are very bullish on, you know, again, AI and data center related power demand growth.  

But given the risk there, there's a lot more of a move towards making these data centers and, you know, tech companies sort of make a long term firm financial commitment to the grid so that if their power demand isn't what we think it might be in five or 10 years, that, you know, they're sort of paying for it. And every day, mom and pop, businesses and homes are not footing the full bill for that. On the supply side, too, with big generators, you know, these are big energy companies. If they want to connect to the grid, they can pay up and pay a share. You know, as long as we speedily interconnect both the load and generation, I think the businesses on the load and generation side will be happy that kind of want a predictable cost and they want speed to get connected, but as long as we do that, they can chip in and keep the rate impact modest to very limited for every other electricity user.  

[22:03] AR: Yeah, so that way they're not imposing these huge costs on the rest of the system for one user. 

[22:09] RG: That's right, that's right, because that's what the stranded cost problem is. And we've seen this when, like South Carolina, tried to build a nuclear plant, and they spent $9 billion and they didn't finish it and so, well, guess who pays the stranded costs? It's everyday, electricity users, citizens, voters, small businesses and home households. You know, have to pay that. So that's the regulatory system. Is everybody has to pay. So you really want to avoid those stranded costs. 

[22:39] AR: Related to that, it would be great if you could talk just a little bit about how that process of paying for this infrastructure differs from other types of industries, because it is kind of unusual, isn't it? And it creates some, sometimes not great incentives for the utilities in terms of what projects they choose to build and how they pay for them.  

[22:59] RG: It is a unique industry. And so, yeah, sometimes I speak with MBA students or whatever who are like, trying to understand finance, and it's a very unique area. And you know the reason? So, I mean, there's sort of a whole set of industries that are public utility regulated public utilities, right?  

So it's not super unusual, it's just the this is different from the rest of the economy. So you look at regulated public utilities, basically they're kind of natural monopolies. If you go back to econ 101, or 201, or whatever, when there's a natural monopoly, then kind of the optimal outcome is to have a regulator determine the amount to invest and then the amount to charge the rate payers to hold it down so they're not actually charging monopoly prices. Consumers don't have to pay the monopoly price, but you do get the efficient amount. That's the process.  

Usually the state has a Public Utility Commission that's the regulator, and usually the utility in a given area is sort of the regulated monopoly provider that all generally work. I mean, at least that system is able to build infrastructure. It does have warts, and it's not always the most efficient, and the incentives can get kind of squirrely a little bit. 

But the big problem we have with transmission is that we had over 1,000 of these utilities around the country who kind of grew up 100 years ago with the industry. Well, the horizontal, geographic connections between the utilities were a later afterthought, and so we really don't have a good system to invest in or determine the right amount of transmission needed across large distances that might cross the utility footprints of 1020, 30 or more utilities. That's what we've been trying to kind of graft on the top. That's what FERC Order 1920 kind of does is across the whole region. Let's determine the right amount and who pays the right amount. And so there is a solution to it. It's just that we're doing this now 100 years after the start of the electric industry, because it didn't grow up with that structure in place.   

[25:00] AR: Yeah, very interesting. So do you think that we're on a path to do that quickly enough? It seems like, at least with respect to some of these data centers, that we hear news stories about how they're seeking to create their own or fund their own generation that they can use separately because they're not seeing the system respond fast enough,  

[25:00] RG: Yeah, clearly we're not doing it quickly enough. The ideas are not rocket science, but they take time, and the longer people sort of litigate or just drag their feet, the less we're going to actually get done. I've been speaking with a number of investors who are all interested in the question, can the US power sector meet this AI driven data center growth, and the answer is probably not at the pace it wants to go.  

Transmission is slow. We didn't start soon enough. I think the industry kind of got the memo that they need to get going now, but we'll see how quickly they can do it. And so we're kind of in a mode of all sorts of creative options are being pursued, including some on-site generation, which—nothing against it—it's just that it's usually not as reliable as grid power. But if you can't get the grid power into your data center or hyperscaler, then you have to get going with whatever level of service you can get right now.  

So we'll probably they'll probably start with gas turbines on site and storage as well, maybe some solar. So we'll see a lot of that, and some other less conventional solutions too. Just because everything is scarce these days, necessity being the mother in her invention, there will be some creative alternative solutions that are not at all ideal, but they might be interim until full grid power is available to the data centers.  

[26:42] AR: I see. So when you talk about that lack of reliability of those alternative solutions, is it not really feasible then to use that as their main source of power and then use the grid to back them up at times when they don't have power?  

[26:56] RG: I mean, I think, again, it's sub optimal, so I think we will see that happening, but it's not as reliable. I mean, the thing about power generation is every source has its own forced outage rate, this 5% or whatever, chance that on any given day it doesn't turn on or doesn't operate. Nuclear needs refueling. Everything has their sort of own vulnerabilities.  

That's why grid power is so reliable, because everything backs everything else up on the grid, but whatever you put on site on any given day might not produce and so, you know, that's the risk you don't get the so called five nines reliability, 99.999% reliability that they really want to have. There's certainly an opportunity to the extent there's data centers or other large loads who can be flexible, ie curtailable, hit certain times and instances, they can probably get connected more quickly if they work with the utility and say, hey, if when you're having a peak situation, just give me a call. Just cut me off. That utility should be able to handle a lot of that, and so that's in the basket of let's get more creative here and figure out how to fit onto the system. I think we'll see some of that as well.  

[28:10] AR: That makes sense. Can you talk a little bit more about some of the recent developments at FERC? They issued also this order 1970 that was important. And I'm sure there must be other recent developments that you find are important. Can you talk a little bit about what those are and what they've done? 

[28:27] RG: Sure, so that one was a backstop, transmission siting order, implementing some changes in the IIJA, the federal legislation, infrastructure investment and jobs act of a few years back, three or four years ago, there's been since 2005 this backstop federal citing role where the idea was, well, local governments and states are in charge of permitting transmission lines, but they're actually interstate lines, and we have a federal regulator, FERC, that permits interstate gas pipelines. Let's at least have some level of that for certain situations, for transmission lines.  

When that passed in 2005 and I was advising the FERC chair during the development of that, we thought it would be used in certain situations, but there were a couple court decisions that sort of rendered it useless along the way in 2009, thereabouts. And so this act right around 2020, 2021 essentially undid those bad court decisions to try to make it functional again. And then that order you mentioned for implemented to legislation. So there was that.  

There was also FERC order 2023 was another one that's related to interconnection of generation and the processes for that which still needs quite a bit of reform. But that was helpful as far as it went. There are some others going back a little bit longer, on distributed energy resources order, 2222 on demand side resources, and then order 841, going further back on energy storage. So FERC is trying to address the new situation and new technologies and make the grid able to integrate these resources in an effective way.  

In terms of current issues at FERC, you know, we have two new commissioners who have been appointed or nominated by the President and approved favorably by the Senate Energy Committee. Now they go the Senate floor for confirmation. I think most people expect they will be confirmed in the you know, by the end of 2025, for thereabouts, they've been pretty silent about what they intend to do once they get to FERC, and probably one of them will be appointed chair when they get there. So it's not clear. I do think the current White House and administration is very much thinking about AI and the economic development and kind of the AI race with China, and how much we need the grid to support that so we could see a continuation of some of these policies, or perhaps new related policies to drive further grid reforms.  

[31:01] AR: Yeah, that's great. So yeah, I was going to ask you more about that. As much as politics seems to divide everything, this is one of those issues you would hope would remain an area where there's bipartisan agreement. So FERC itself is one of those independent commissions, right, that has five commissioners, five seats. They're not necessarily filled all the time, and there's a designated number that are supposed to be from each political party, right? That's right. Do you see with other federal agencies and independent agencies and even the Federal Reserve, a move to bring back some of that authority into the White House and question even the legal basis of some of those independent agencies? Do you see that happening with FERC as well, or is that an area that's been sort of separated from that type of controversy? 

[31:47] RG: Yes, I mean, I think it is the general policy of this White House that they don't view independent agencies as independent, and they want the agencies all to sort of follow the policy guidance from the White House. Now, we have not seen this really play out specifically with FERC, but it's on everybody's mind in and around FERC. What's going to happen? I mean, as one former Republican FERC chair said the agency is only as independent as the commissioners individually want to be. So like, if the chair wants to take cues from the White House, it's always been the case that they could they have at different times, there's not like a black and white line there about independence.  

On the other hand, obviously, firing a commissioner like has been done for the Federal Reserve or the Federal Trade Commission, is anathema to the entire history of independent agencies and everybody, including me. Well, not everybody, but almost everybody who has practiced at FERC over the years is very concerned that that could happen at FERC now, I don't think any of the current commissioners are really at risk of being fired. I mean, the two Democrats have always operated in a very bipartisan way.  

So there's nothing that I think puts them at risk unless there were just in order to get a majority, anybody would be at risk. But they already have a majority coming in as soon as these two new ones come on, so it's unlikely, I think, to see a FERC Commissioner fired just because of those reasons, but it's not because this White House is willing to preserve for independence. It's just because of the reality of the commissioners.  

[33:30] AR: I see. Related to that, there are these other laws that that have a bearing on this stuff, like the inflation Reduction Act and the IIJA that you mentioned, and some of those have been reduced either in their implementation or otherwise. That seems like one of the perils of the political time that we live in, is that whether any particular policy is good or bad, that there's a certain amount of whiplash from one policy going in a certain direction and then another administration coming and moving in another direction that makes it very hard to have continuing policies over a long period of time, and it seems like that's especially a problem when you're talking about long lived infrastructure and long term planning over decades. Are you seeing some of that also, or is this an area where there's enough bipartisan kind of cooperation that we've been able to avoid some of that?  

[34:21] RG: If you're talking about the power sector broadly, then we're talking about generation and the tax credits that were just mostly removed as a result of the OBBBA, the budget bill. That's definitely going to have a big impact on the generation growth in the country. We'll probably see solar going pretty strong for the next couple of years to get under the wire before they expire, but after that, less so and not in line with carbon targets for the country that we used to have. 

But actually more troublingly to me, is the discriminatory denial of energy permits for projects. So wind and solar most clearly it's obvious with offshore wind, where future permits are not being granted, and even existing permits, even for projects that are 80% built, are getting denied or getting a stop work order. So you have, you know, union labor employees out on boats trying to work on stuff, and they get called back and say, stop work. But even on land, any kind of permit you might need from any federal agency right now is sort of in question. A lot of these things used to be viewed as automatic. It's really a troubling discriminatory attack on wind and solar, which is kind of an anti free market approach, to the extent, though, is any thought that this would be a free market administration or end red tape or a deregulatory it's it's not that it's a heavily regulatory, anti free market denial of permits that we're seeing unless, you know, hopefully this gets straightened out soon, and maybe it will. But as as it looks like right now, it's an extremely confusing outlook for for new, clean generation. 

[36:10] AR: So it sounds like it's mostly on the generation side of things that we're seeing that whiplash, but on the on the transmission side, things are somewhat steady.  

[36:20] RG: That's right, partly because of the, you know, AI and data center and all that. But of course, you know that should apply too, because what generation resources are really going to help serve all of this growth in demand? Certainly, we'll do some gas generation, but you can't get a turbine now for five years if you order one today, and nuclear isn't happening this decade, and new coal isn't ever happening. So then you're left with wind and solar and battery storage that can make major contributions to meet that growth in this decade, but only if you allow it to proceed, as opposed to deny their permits.  

[36:56] AR: And the natural gas turbine issue that you're talking about is because of supply chain disruptions.  

[37:00] RG: Yeah, that's right. I mean, we just had this sudden surge of demand, and we didn't have the manufacturing capacity to build those. And, you know, the amount that we thought we needed was very low in terms of new gas generation capacity. And so it's just, you know, we can't keep up. The industry can't keep up with that demand.  

[37:22] AR: When you talk about some of these things not moving as fast as we might like them to move, or some of these impediments to this kind of progress, do you think that there are a lot of opportunities for certain regions to move forward on their own, or does this really require federal leadership to bring about the progress?  

[37:39] RG: Yeah, great question. Well, I mean, assuming we can get permits for generation, then a lot of regions can pursue transmission plans and build out the infrastructure. They don't have to wait for Washington DC, and a lot of regions are doing a lot. There are actually four different regions that are looking at high voltage, 765 KV lines, which we haven't built those in three or four decades. So there are some regional plans happening. New England states all got the grid planner there to get busy planning. California is doing a lot to import power from other states to complement the in state solar. So there are some things happening around different states and regions.  

[38:23]AR: That's very good to hear. You mentioned the problem of inter regional transmission and that being an area for real possible improvement. Do you think that that is the biggest unsolved problem in this transmission world that you see, or is there something else that you think it's the bigger, tougher issue that the country is facing right now.  

[38:44]RG: Yeah, that'd be a great candidate for the for the most important one that really needs attention. That was the opinion, as I understand it, of the Senate Energy Committee couple years ago when senators Barrasso and Manchin put together the energy permitting Reform Act, EPRA. It didn't pass, but the Energy Committee, on a bipartisan basis, I think both looked at it and said, Well, boy, it's kind of hard to say the inter regional transmission is getting done under the current status quo. So we really do probably need some policy intervention there to get that going, and so that Bill had a heavy focus on inter regional transmission for that reason.  

[39:26] AR: I'm sure you probably have encountered a lot some current discussion around what is sometimes called the abundance agenda. Ezra Klein and Derek Thompson wrote a book that made it even more popular recently, to what degree do you see what's going on with the power grid, as in line with that, versus: the power grid is a very different and unique animal and has its own issues that are really separate from that?  

[39:49] RG: I think the power grid is very much aligned with the whole abundance agenda. I mean, there are great parallels with housing. And other things, where, with housing, if you can't build supply, then rents go up and housing prices go up. And my kids generation, people in their 20s, are coming out, trying to get houses. And there's it's very expensive. Yet, if we would build more and we would get over the constraints that prevent a lot of housing, we could integrate a lot more and have lower prices.  

Same for the grid and that for climate and decarbonization purposes. If you can't build new infrastructure, then you're locking in the older, dirtier infrastructure that we all relied on. Turns out, to replace the dirty stuff you got to build the clean stuff, and if it's hard to build, then you can't do that. And so all of these efforts in the abundance sort of framework of making it easier to build infrastructure definitely help, because you can build a lot of clean energy and the associated infrastructure if you make it easier to build.  

[41:00] AR: I know we're coming to the end of our time here, but for people who are interested in following your work or the public thought leadership that your firm, Grid Strategies puts out, what are the best ways for them to follow you and your work and the stuff that your your firm is doing? 

[41:17] RG: The best is probably LinkedIn or Twitter or blue sky, Twitter, X whatever. You know those areas. Our website is http://gridstrategiesllc.com, and you can go there.  

[41:27] AR: Well, it's been just so interesting and so helpful to understand such a complicated area and how this technical area really is the linchpin of what's needed to decarbonize the economy.  

[41:41] RG: Yes. Well, thanks for your interest. I hope everybody know your listeners are interested. They should be. It is a high leverage area, and in our opinion, very significant impacts can be made.  

[41:52] AR: Absolutely, well, Rob Gramlich, thank you so much for joining us on financial climate. 

[41:57] RG: Thanks, Alex, great to be here.
 
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